Not a penny! That’s how much compensation we receive from brokerage firms, mutual fund companies, banking institutions, and insurance companies. Therefore, as a Mainstay Capital Management client, you never need to be concerned about this potential conflict of interest. As a fee-only, independent, investment advisor, our goal is pure and simple – to find the best investment options to meet your personal portfolio objectives – period.
We find it important, in light of recent reports by the media, to remind our clients and inform our prospective clients of some important points on how we are and are not compensated for our services.
In 2002 there were a number of articles in the financial press and a nearly industry wide fine levied by the Securities and Exchange Commission against major brokerage firms concerning conflicts of interest in these firms’ stock recommendations. More recently there has been much media attention and regulatory scrutiny concerning the conflicts of interest at some brokerage firms, mutual fund companies, banking institutions, and insurance companies related to mutual fund and annuity sales practices.
The first issue is related to charges brought against some of the major brokerage firms and their analysts for stock recommendations “tainted” by the firm’s investment banking relationship or other business interests in the company whose stock they are rating (buy, sell, or hold). The second issue is more directly related to our business as an investment advisor. There has been a great deal of press and charges levied by state and federal securities regulators concerning the mutual fund sales practices of brokers and financial advisors. Many brokers and financial advisors receive commissions for the mutual funds and/or the annuities they sell to their clients or recommend for their clients’ portfolios. These commissions, sometimes referred to as “revenue sharing” or “trailers”, vary from company to company. We believe these forms of compensation from the mutual fund companies, insurance companies, and brokerage firms present an obvious conflict of interest. It begs the question, “Is the broker or financial advisor recommending a mutual fund or annuity because it is truly the best investment alternative for your personal objectives or because it is the mutual fund or annuity for which they receive the best commission?”
The point of this letter is to remind our clients and inform our prospective clients that Mainstay is a fee-only, independent, investment advisor, which means the only compensation we receive is from you, our client. We do not receive any monetary compensation from any of the mutual funds we hold in your portfolio. Therefore, as an MCM client, you never need to be concerned about this potential conflict of interest. Our goal at Mainstay Capital Management is pure and simple – to find the best investment options available to meet your personal portfolio objectives – period.